Hereby a collection of companies already leveraging the power of IBM Hyperledger Fabric.
The most difficult change for banks may be adopting a new attitude toward risk that includes the use of innovative practices to address it. That doesn’t mean financial service firms need to settle for a blockchain solution that creates greater risk. The very premise and promise of blockchains is to decrease risk and increase resiliency, transparency and trust; in other words, to create a “trustless” environment where third-party validation is not a separate activity as it was in the past. This outcome should be a prominent design point, one that is established from the outset and continuously evaluated as blockchain initiatives progress.
However, based on the CLS-IBM collaboration, it seems most banks will need to readjust their approach to risk in terms of go/no-go decisions, especially in the early phases of a project. CLS is the largest provider of settlement and risk mitigation services for the global foreign exchange market. Our first blockchain project involved the bilateral payment netting of foreign exchange trades in more than 140 currencies for buy-side and sell-side institutions.
While the service we were introducing could have been delivered through traditional methods, we decided to develop a blockchain-based solution. Blockchain, we recognized, would simplify the architecture and enable scalability of the underlying solution, as well as provide a strategic network across which additional blockchain services could be delivered. Because we were entering new technology domains, we began consultations with regulators at the outset.
As we’ve learned, organizations can design their first blockchain initiative to avoid significant risks. At CLS, our first decision was not to build a bridge too far or wide. In other words, our first initiative could not be one where failure put our existing business at risk. Other institutions have learned this too well
launching core business products on untested technology is a high-risk strategy. Additionally, it’s important that blockchain-based solutions leverage the capabilities of the wider organization. At both IBM and CLS, we started by extending an existing process to augment a service, a consideration that reduced risk. This enabled us to deliver a blockchain-based solution that is integrated with an existing ecosystem spanning processes, governance and supporting applications.
Instead of replacing a business process with a new one or reengineering it entirely, we found during one of our first projects, at the IBM Global Financing (IGF) Unit, that adding new functionality to an existing process is a good place to start. At IGF, which extends credit to partners who purchase from IBM suppliers, we began with dispute resolution, which had been a lengthy and labor intensive process. IGF’s blockchain for dispute resolution can handle the 2.9 million transactions that lead to an average of 25,000 disputes annually and tie up about USD 100 million in capital. As a result, the time to resolve disputes is expected to drop from more than 40 days to fewer than ten, improving capital efficiency by 40 percent.
IGF chose not to replace its existing systems. Instead, it transferred data from legacy systems to a blockchain that operated in parallel. This eases the challenge of integrating blockchains with existing processes and accelerates the time to move to production.
At CLS, we approached the challenge from a client-centric perspective. We designed a technological interface that didn’t require our clients to use blockchain to access the netting service. They have the option to use the new service via their existing SWIFT systems or directly by hosting their own blockchain nodes on our closed and secure network.
Carbon emission reduction
In use by the carbon asset market in China, it allows enterprises to generate carbon assets more efficiently, helping to build a green, low-carbon and environmentally-friendly future in China. Carbon asset development, also known as CER (Carbon Emission Reduction) quota issuing, is one popular ways of encouraging enterprises to decrease emissions and use low carbon emission technology.
“It is estimated that the platform will significantly shorten the carbon assets development cycle and reduce the cost of carbon assets development by 20 to 30 percent, enabling cost-effective development of a large number of carbon assets,” said Cao Yin, Chief Strategy Officer of Energy-Blockchain Labs. “Blockchain technology is expected to become an important means for effective control of carbon emissions, which is of great significance to China, the world’s largest source of carbon emissions.”
The two companies completed a proof of concept in late 2016 and a beta version of the carbon asset management platform on blockchain will be released in May. Energy-Blockchain Labs and IBM intend to commercially offer this platform later this year, keeping pace with China’s unified national carbon market opening.
“Energy-Blockchain Labs is committed to being the global leader in digitalized green assets and we expect to improve the efficiency of the carbon market and green finance market,” said Lin Le, CEO of Energy-Blockchain Labs. “We are delighted to be working with IBM on carbon reduction. We also expect to work with more partners to tackle climate change.”
Blockchain technology offers a solution to many of the problems facing the carbon market. Digital collaboration across organizations combined with smart contracts will be designed to greatly improve efficiency of carbon assets development and management. Security-rich and immutable distributed ledger technology increases the credibility of the carbon emission reduction market. Blockchain technology also provides transparency and auditability which help stakeholders address regulatory requirements.
“As an important signatory of the Paris Agreement, China must assume its responsibility for global climate governance and continue to fulfil its pre-2020 climate change action targets and build a standard nationwide carbon market,” said Li Junfeng, Director of China’s National Climate Change Strategy Research and International Cooperation Center (NCSC). “We must work to limit high energy consumption and high emission industries, encourage clean energy development and further promote energy saving and emission reduction. These tasks are not only necessary for China’s own sustainable development, but for the welfare of the entire human family.”
“The use of blockchain technology in carbon emission reduction by IBM and Energy-Blockchain Labs is an important step forward,” said Chen Liming, Chairman, IBM Greater China Group. “It is another way IBM is helping Chinese businesses use innovative technology to build a cooperative, fair and reasonable global climate change governance mechanism. As a founding member of the Linux Foundation Hyperledger Project, IBM is committed to providing more innovative enterprise-level blockchain technology and helping Chinese enterprises build blockchain ecosystems.”
IBM Watson Health (NYSE: IBM) has signed a research initiative with the U.S. Food and Drug Administration (FDA) aimed at defining a secure, efficient and scalable exchange of health data using blockchain technology. IBM and the FDA will explore the exchange of owner mediated data from several sources, such as Electronic Medical Records, clinical trials, genomic data, and health data from mobile devices, wearables and the “Internet of Things.” The initial focus will be on oncology-related data. Transformative healthcare solutions are possible when healthcare researchers and providers have access to a 360-degree view of patient data. Today, patients have little access to their health data and cannot easily share with researchers or providers. Giving patients the opportunity to share their data securely, for research purposes or across their healthcare providers, creates opportunities for major advancements in healthcare. Blockchain technology, which enables organizations to work together with more trust, is designed to help make this a reality.
By keeping an audit trail of all transactions on an unalterable distributed ledger, blockchain technology establishes accountability and transparency in the data exchange process. In the past, large scale sharing of health data has been limited by concerns of data security and breaches of patient privacy during the data exchange process.
A recent IBM Institute for Business Value paper ‘Healthcare rallies for blockchains’, based on a survey of about 200 healthcare executives, found that more than seven in ten industry leaders anticipate the highest benefits of blockchain in healthcare to accrue to managing clinical trial records, regulatory compliance and medical/health records.
IBM and the FDA will explore how a blockchain framework can potentially provide benefits to public health by supporting important use cases for information exchange across a wide variety of data types, including clinical trials and “real world” evidence data. New insights combining data across the healthcare ecosystem can potentially lead to new biomedical discoveries. Patient data from wearables and connected devices for example, can help doctors and caregivers better manage population health.
The collaboration will also address new ways to leverage the large volumes of diverse data in today’s biomedical and healthcare industries. A secure owner-mediated data sharing ecosystem could potentially hold the promise of new discoveries and improved public health.
IBM brings extensive expertise in blockchain technology, for example, IBM is founding member and key contributor to the Linux Foundation’s Hyperledger project.
As the promise of blockchain in healthcare becomes increasingly evident, IBM will work to define and build the technological solution for a scalable and decentralized data sharing ecosystem.
“The healthcare industry is undergoing significant changes due to the vast amounts of disparate data being generated. Blockchain technology provides a highly secure, decentralized framework for data sharing that will accelerate innovation throughout the industry,” said Shahram Ebadollahi, Vice President for Innovations and Chief Science Officer, IBM Watson Health.
The Yijian Blockchain Technology Application System is a permissioned blockchain platform that uses Hyperledger Fabric. It is in production with Hejia and one pharmaceutical retailer, a hospital and a bank running business transactions. In July, Hejia plans to expand the platform to include multiple pharmaceutical retailers, hospitals and banks. The system is designed to help eliminate some of the financing challenges in the pharmaceutical industry.
Small and medium-sized pharmaceutical retailers in China often find it difficult to raise funds as a result of an underdeveloped credit system and a lack of established credit evaluation and risk control. For example, it could take pharmaceutical retailers 60~90 days to recover payment after delivering medicine to hospitals. Without sound credit records and collateral to meet financing standards, these retailers often find it difficult to get loans from traditional financial institutions.
Working with IBM, Hejia has established a blockchain-based business network among these supply chain participants. By tracking drugs through the supply chain and encrypting trading records, the transparency of the blockchain can help establish the authenticity of the transaction. In turn, this may help lower the credit risk profiled by financing institutions, which should allow the payment period to be shortened, possibly to the first or next trading day. Overall, the platform is designed to help to reduce the turnover time of funds on both sides of the supply chain and allow banks to be more informed and grant access to funding for small and medium pharmaceutical retailers.
Mr. Leng Tianhui, Board Chairman of Hejia, said, “The launch of the supply chain financial services platform marks a milestone for the cooperation between Hejia and IBM on the innovative application of blockchain technology. In the future, the platform will expand to include more industries to provide participating companies and financial institutions with transparent and efficient financing services built on blockchain-based innovation in a business model that will contribute to China’s economic development.”
The launch of the platform also marks the successful business transformation of Hejia. IBM helped Hejia by providing insights from analyzing the supply chain finance industry and the financing conditions facing pharmaceutical retailers.
Doctor Shen Xiaowei said, “Blockchain can fundamentally transform businesses by eliminating inefficiencies, speeding up transactions and enabling innovative new business models. The Yijian Blockchain Technology Application System we’ve built with Hejia is a great showcase of this capability. We look forward to continued collaboration with Hejia to apply this technology to other industry use cases.”
“IBM offers an enterprise-grade blockchain platform built on the Hyperledger Fabric that helps clients define and develop new industry use cases,” said Gregor Pillen, Managing Partner, IBM Greater China Group Global Business Services. “We have a deep understanding of various industries and leading technologies that we use to help resolve enterprise clients’ business challenges while finding growth opportunities so that they can help contribute to China’s economic transformation.”
London Stock Exchange Group
“Through our work with IBM on this blockchain solution, Borsa Italiana is taking the lead in transforming the way European SMEs can manage their shareholder data and at the same time expand credit access — all on a trusted digital platform,” said Raffaele Jerusalmi, CEO, Borsa Italiana.
The blockchain solution for unlisted SMEs in Europe is designed to replace the paper trading certificates that are commonly issued to private companies today. With a more digitized, streamlined and transparent process enabled by the blockchain solution, various parties — including issuers, regulators and investors — will have increased insight into company information.
Traditionally, private SMEs lack access to public stock exchange networks or formalized credit structures. With this solution, SMEs in Europe can better access credit and link into a broader and more mature investor ecosystem, enabling them to set up new trading networks and obtain funding by sharing financial data in a security-rich and transparent public arena. By implementing the blockchain solution, Borsa Italiana is taking the lead in transforming how private companies can exchange and bring transparency around shareholder data and expand credit access.
“LSEG is testing the use of blockchain technology in a financial business network where data segregation and confidentiality is vital. By working with IBM, a pioneer in building enterprise-class blockchain solutions, we are committed to building, testing and scaling our capabilities in emerging technologies over time,” said Chris Corrado, Group COO and CIO, London Stock Exchange Group.
Built on Hyperledger Fabric version 1.0, a blockchain framework and and one of the Hyperledger projects hosted by The Linux Foundation, the system is designed to help ensure that highly sensitive securities data can be shared amongst permissioned network participants while remaining secure and gated. This blockchain solution, developed in collaboration with IBM, is built on highly secure infrastructure technology that provides the highest levels of encryption commercially available. The solution is also built to achieve interoperability with LSEG’s existing systems, promoting efficiency and business continuity.
“Sharing secure and transparent critical network data across shareholder networks is difficult using traditional system,” said Marie Wieck, general manager, IBM Blockchain. “Blockchain is poised to help remove some of these barriers in traditional methods for the transfer of value — much as the Internet did for the exchange of information in the late 1990s.”
The solution is undergoing an initial test phase with a small group of partners and clients.
TenneT Energy Community
Because renewable electricity generation accounts for a growing share in the overall power supply, the electricity grid is becoming more volatile. In the coming years there will be times when conventional energy sources will not be able to fully meet the demand for electricity. To address this, TenneT is working to find new ways of maintaining the security of supply. As part of a broader Digital Transformation Program, TenneT is exploring the use of a permissioned blockchain network that uses Hyperledger Fabric to integrate flexible capacity supplied by electric cars and household batteries into the electrical grid. TenneT CEO Mel Kroon commented: “These pilot projects are part of TenneT’s broader strategy of preparing the electricity system to accommodate the growing volume of renewable energy.”
TenneT will be testing this new concept in two pilot projects:
Pilot project by Vandebron in the Netherlands
TenneT is responsible for maintaining the balance on the high-voltage grid. To guarantee a continuous supply of electricity, supply and demand have to be balanced 24 hours a day, seven days a week. In the event of imbalance between supply and demand, TenneT makes sure additional electricity is supplied or deploys reserve capacity. In this pilot project, Vandebron will work with customers who own an electric vehicle to make the capacity of their car batteries available to help TenneT balance the grid. Vandebron will provide this service to its customers without compromising the availability of their car battery. The blockchain enables each car to participate by recording their availability and their action in response to signals from TenneT.
Pilot project by sonnen eServices in Germany
Re-dispatch measures prevent regional overloads on the grid. This system is necessary, for example in Germany, when wind energy produced in northern Germany cannot be transported to the industrial centers in the south of the country. In this pilot project with sonnen eServices (the energy group of the Sonnen group), a network of residential solar batteries will be made available to help reduce the imposition of limitations on wind energy at times of insufficient transport capacity. The blockchain presents the operator from TenneT with a view of the available pool of flexibility, ready to activate at the push of the button, after which the blockchain records batteries’ contribution. This will enable sonnen and TenneT to support the integration of renewable energy sources into the German electricity supply system.
Market parties will be informed about the pilot projects and relevant developments by means of newsletters and market consultation workshops in the Netherlands and Germany. Once the concept has been proven to work, it will be launched and the TenneT Energy Community will be open for other parties to join.
The digital process of verifying and documenting the performance values of these distributed flexible energy devices is delivered using IBM Blockchain, built with Hyperledger Fabric, a blockchain framework implementation and one of the Hyperledger projects hosted by The Linux Foundation. Blockchain is suited to connecting multiple parties and large numbers of distributed computing nodes and enabling them to undertake joint action in a scalable, transparent and trusted network. IBM will develop this platform to ensure the verifiability and transparency of the transactions of the small-scale batteries and electric cars. The blockchain will enable optimal distribution across all markets and functions. This way, TenneT will be able to gain insight and have the possibility to activate flexibility in the energy system, while consumers are facilitated in making their flexibility available to the balancing market.
Multinational enterprise software giant SAP has launched a cloud platform that is dedicated to helping corporates develop blockchain applications.
Announced during an SAP event Wednesday, the cloud-based solution aims to provide enterprises with a framework to build business applications on top of blockchain systems such as Hyperledger Fabric, the blockchain platform launched by the Linux Foundation, of which SAP is also a contributor.
The company said in the announcement that the work is being formally rolled out after it has worked with 65 companies within its Blockchain Co-Innovation Initiative that trialed blockchain applications in various industries such as supply chain, manufacturing, transportation, food and pharmaceuticals.
Earlier last month, CoinDesk reported that the company is working with the U.S. sausage maker Johnsonville, as well as Naturipe Farms and Maple Leaf, to pilot a project that tracks the origin of food products across the supply chain as a part of its Farm to Consumer initiative.
In addition to its co-innovation program, SAP has also announced it is forming a blockchain consortium, members of which are entitled to use tech developed by the group. Notable firms in the consortium currently include HP Enterprise, Intel and UPS.
The work marks SAP as the latest tech giant that has rolled out a platform for blockchain application development, following similar works done by Microsoft, IBM and China’s Baidu and Tencent.
ANZ and Westpac have teamed with IBM (NYSE: IBM) and shopping center operator Scentre Group and have now successfully digitised the bank guarantee process used for commercial property leasing. The trial used Distributed Ledger Technology (DLT) to eliminate the need for current paper-based bank guarantee documents, resulting in a single source of information with reduced potential for fraud and increased efficiency. DLT powered by Hyperledger Fabric V1.0 is a blockchain framework and one of the Hyperledger projects hosted by The Linux Foundation. DLT is part of what underpins a blockchain.
The companies involved in the trial have today released a whitepaper detailing how the solution worked and how it could be used in other situations that rely on bank guarantees.
In addition to eliminating the need for physical document management, the trial also addressed other inefficiencies in the current bank guarantee process, including the challenges in tracking and reporting of a guarantee’s status through multiple changes.
This forms part of a broader plan to build a shared solution with the rest of the industry, and to invite other organizations to participate in a larger pilot.
Commenting on the successful trial, Mark Bloom, Chief Financial Officer at Scentre Group, said: “An update of the decades-old process for issuing, tracking and claiming on guarantees is long overdue.
“With approximately 11,500 retailers across Australia and New Zealand, who use guarantees to support rental obligations, manual tracking of guarantees has been an extremely cumbersome and labour intensive process.”
Nigel Dobson, General Manager Wholesale Digital, Digital Banking at ANZ, said: “We have been keen to avoid the hype surrounding blockchain and distributed ledger technologies, and instead focused on practical and deliverable use cases.
“This proof of concept demonstrates how we can collaborate with our partners to develop a digital solution for customers, which also has the potential for industry-wide adoption.”
Andrew McDonald, General Manager Corporate and Institutional Banking at Westpac, said: “This is about removing the cost of fraud, error and operational risk that will continue as long as bank guarantees remain paper-based and manually issued.
“Next steps involve encouraging all industry players to adopt this technology so we can better protect and save money for our customers. Beyond that there is no reason why this couldn’t be applied across other industries.”
Dr. Joanna Batstone, Vice President and Lab Director of IBM Research Australia, said: “Using an agile approach, IBM collaborated with ANZ to combine the bank’s deep knowledge of the industry and their partners, with IBM’s blockchain expertise.
“The business use case demonstrates the opportunity to lift efficiency and transparency for all parties involved. We believe blockchain can potentially drive productivity across all Australian industries.”
Every year, one-in-ten people fall ill — and 400,000 die — due to contaminated food.* Many of the critical issues impacting food safety such as cross-contamination, the spread of food-borne illness, unnecessary waste and the economic burden of recalls are magnified by lack of access to information and traceability. It can take weeks to identify the precise point of contamination, causing further illness, lost revenue and wasted product. For example, it took more than two months to identify the farm source of contamination in a recent incidence of salmonella in papayas.**
Blockchain is ideally suited to help address these challenges because it establishes a trusted environment for all transactions. In the case of the global food supply chain, all participants — growers, suppliers, processors, distributors, retailers, regulators and consumers — can gain permissioned access to known and trusted information regarding the origin and state of food for their transactions. This can enable food providers and other members of the ecosystem to use a blockchain network to trace contaminated product to its source in a short amount of time to ensure safe removal from store shelves and stem the spread of illnesses.
Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever, Walmart and others are now coming together with IBM to further champion blockchain as an enabling technology for the food sector. Together they will help identify and prioritize new areas where blockchain can benefit food ecosystems and inform new IBM solutions. This work will draw on multiple IBM pilots and production networks in related areas that successfully demonstrate ways in which blockchain can positively impact global food traceability.
“Unlike any technology before it, blockchain is transforming the way like-minded organizations come together and enabling a new level of trust based on a single view of the truth,” said Marie Wieck, general manager, IBM Blockchain. “Our work with organizations across the food ecosystem, as well as IBM’s new platform, will further unleash the vast potential of this exciting technology, making it faster for organizations of all sizes and in all industries to move from concept to production to improve the way business gets done.”
New IBM Blockchain Platform
Beyond food supply chain applications, blockchains are now being used to transform processes and streamline transactions for everything from flowers, real estate and trade finance, to education, insurance and medical services.
To accelerate this adoption, IBM is introducing the first fully integrated, enterprise-grade production blockchain platform, as well as consulting services, that will allow more organizations to quickly activate their own business networks and access the vital capabilities needed to successfully develop, operate, govern and secure these networks. The IBM Blockchain Platform is available via the IBM Cloud.
The platform builds off of the successful blockchain work IBM has delivered to more than 400 organizations, incorporating insights gained as IBM has built blockchain networks across industries including financial services, supply chain and logistics, retail, government and health care.
Extensively tested and piloted, the platform addresses a wide range of enterprise pain points, including both business and technical requirements around security, performance, collaboration and privacy that no other blockchain platform delivers today. It includes innovation developed through open source collaboration in the Hyperledger community, including the newest Hyperledger Fabric v1.0 framework and Hyperledger Composer blockchain tool, both hosted by the Linux Foundation.
The integrated platform allows multiple parties to jointly develop, govern, operate and secure blockchain networks to help enterprises accelerate blockchain adoption.
Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group have joined an initiative launched by UBS and IBM (NYSE: IBM) in 2016 to build a new global trade platform based on blockchain technology. This new platform, called Batavia, is built to be openly accessed by organisations of all sizes anywhere in the world, and can support trade finance for transactions across all modes of trade, whether goods are being transported by air, land or sea. Batavia advances the work initiated by UBS and IBM to develop a trade finance platform built on the IBM Blockchain Platform powered by the Hyperledger Fabric Blockchain framework. The development work is being done collaboratively by the five banks and IBM in consultation with transportation industry experts as well as the banks’ customers to ensure that the platform is flexible and intuitive for customers and can be commercialized. Batavia is targeting pilot transactions with customers on the network in early 2018 to test and refine the platform.
Designed to support more efficient, transparent and cost effective transactions, the new global trade financing platform will help organizations more easily build multi-party, cross-border trading networks worldwide. Batavia will allow transacting parties to view the progress of a shipment as it leaves the warehouse, is loaded onto a plane, truck or boat and arrives at the receiving port, automatically releasing payments incrementally along each step of the process.
The platform will help connect participants in a trading network, delivering the potential to transform global trade. The open nature of the platform, which encourages broad participation by many banks, vendors and regulators, will also help open new trade corridors, bring new players into the market and expedite processes that before were prohibitively time-consuming and expensive.
Traditionally, trading partners, including buyers, sellers, their banks, transporters, inspectors and regulators have relied on large volumes of paper based documentation to securely conduct trade transactions. This process can take up to weeks, incurring costs, making data vulnerable to errors due to repeated manual reprocessing and tying up capital. Delays and lack of transparency in trade can make it difficult for companies to access financing, limiting their ability to trade across borders and grow revenues. The Batavia platform will eliminate the necessity to handle and compare documents, allowing buyers, sellers and their banks to execute transactions with a high degree of efficiency and transparency.
Blockchain enables greater transparency by digitising agreements entered into a permanent, immutable ledger that all involved parties in a trade transaction can view. The status of a contract until its fulfilment is updated automatically through IoT sensor data or user input. Batavia will save users time and reduce costs by ensuring the integrity of data as it changes hands, reducing third-party verification processes and minimising the potential for errors, tampering or disputes. When all participants in a transaction can access a shared version of the truth, they can interact with greater trust, building larger and more distributed networks, and in turn, growing revenue.
Today, making international payments can be costly, laborious and error-prone. Transactions in different currencies can require multiple intermediaries and take days or weeks to complete. According to the World Bank, initiatives to modernize payments and provide financial access could improve the flow of currency and commerce, and help achieve the goal of extending financial services to one billion people by 2020*.
The solution is already processing live transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand and the United Kingdom. Using a blockchain distributed ledger, all appropriate parties have access and insight into the clearing and settlement of financial transactions. It is designed to augment financial flows worldwide, for all payment types and values, and allows financial institutions to choose the settlement network of their choice for the exchange of central bank-issued digital assets.
For example, in the future, the new IBM network could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia. The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalize transaction terms with immediate payment, conducting global trade with transparency and relative ease.
IBM has convened an initial group of diverse banking leaders as part of the development and deployment process, including Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal Commercial Banking Corp. (RCBC) Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw (HK) of WorldCom Finance, and other financial institutions.
“With the guidance of some of the world’s leading financial institutions, IBM is working to explore new ways to make payment networks more efficient and transparent so that banking can happen in real-time, even in the most remote parts of the world,” said Bridget van Kralingen, Senior Vice President of IBM Industry Platforms. “Making distributed ledger technologies more interoperable is the latest example of IBM’s leadership driving the rapid advancement of blockchain.”
“TD Bank is pleased to participate along with fellow banking leaders to observe how IBM Blockchain can support more secure and effective payments solutions,” said Rizwan Khalfan, EVP and Chief Digital and Payments Officer, TD Bank. “We’re focused on innovation that adds value for our customers and our business, and blockchain presents a tremendous opportunity to transform and enhance payment systems, enabling us to continue to evolve the products and services we can offer.”
In keeping with IBM’s commitment to open source, the solution is run from the IBM Blockchain Platform on Hyperledger Fabric and was built in collaboration with Stellar.org, a non-profit organization and associate member of Hyperledger, and KlickEx Group, a regional financial services company in the Pacific region. Stellar is an open-source blockchain network that is purpose-built for the issuance and exchange of digital assets. Digital assets are issued on the Stellar network as a foreign exchange bridge to allow for near real time settlement. KlickEx Group serves as the founding financial institution for the region, servicing banks, retail clients and consumers using this new network.
IBM will continue to advance the solution with the goal of expanding capabilities in order to support central bank-issued digital currencies, securities, bonds and structured financial assets. IBM Blockchain provides high performance orchestration to move payments among parties. Each payment is immutable once recorded, and settlement instructions are provided via smart contracts on Hyperledger Fabric. Initially, Stellar will provide the network and digital asset to facilitate the settlement of transactions cleared on Hyperledger.
“This new innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole,” said Jed McCaleb, co-founder of Stellar. “We are using blockchain technology in production to facilitate cross-border payments in multiple integrated currency corridors. Currently, cross-border payments tend to take up to several days to clear. This new implementation is poised to start a profound change in the South Pacific nations, and once fully scaled by IBM and its banking partners, it could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations.”
The network is currently in use by Advanced Pacific Financial Infrastructure for Inclusion (APFII) members, a public-private partnership initially funded by the United Nations and SWIFT. It is expected to process up to 60 percent of all cross-border payments in the South Pacific’s retail foreign exchange corridors including Australia, New Zealand, Fiji, Samoa and Tonga by early next year. Commercial banks such as Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal Commercial Banking Corp. (RCBC) Philippines, Sumitomo Mitsui Financial Group, TD Bank, and Wizdraw (HK) of WorldCom Finance will be invited to join the network and help it expand in different parts of the world beginning in 2018.
“This is the first time anyone has made blockchain work at an institutionally viable scale,” said Robert Bell, Chairman of APFII and founder of KlickEx Group. “Through KlickEx, the Pacific has had relatively low-cost, real-time, multi-currency payments for most of the past decade, and this project was a natural next step following our work to create seamless and borderless payments across the Pacific. We look forward to the results with using IBM Blockchain as we continue to push forward with our mission to remove payment friction across borders.”
This production blockchain network with KlickEx and Stellar is one of many blockchain projects underway by IBM in financial services including foreign exchange payments netting, private equity administration, securities lending and trade finance.
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